Marc Benioff’s Salesforce.com made an 8-K regulatory filing with the Securities and Exchange Commission on Friday, indicating it had entered into an agreement by way of a plan of reorganization to merge with, and thereby acquire, the privately held customer relationship management (CRM) company RelateIQ.
RelateIQ provides a relationship intelligence platform, one that uses data science and machine learning to automatically capture data from email, calendars and smartphone calls and provide data-science-driven insights in real time. Following the acquisition, RelateIQ will become a wholly owned subsidiary of Salesforce.com and its management team will be absorbed into the company.
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As consideration for the acquisition, Salesforce.com will be issuing shares valued at approximately US$350 million, in exchange for the cancellation of RelatedQ’s capital stock, plus the approximately US$40 million of cash currently in the RelatedQ balance sheet, subject to customary closing adjustments. In addition, Salesforce.com will assume the obligation for all presently outstanding, but still unvested, stock options and other equity awards of RelateIQ.
The exact number of Salesforce.com’s shares issuable for the merger will be determinable based on a weighted average price during a ten day period prior to the opening of trading on the trading day immediately before the closing takes place. Salesforce.com currently estimates it will issue new shares to cover the deal within a range of between 6.2 and 7.6 million shares, according to its filing with the SEC on Friday.
The acquisition is expected to close during Salesforce.com’s fiscal third quarter ending October 31, 2014. The company presently does not expect the transaction to have an impact on its forward guidance for revenue, non-GAAP EPS, or operating cash flow, for its current fiscal year to January 31st 2015. However, it may impact GAAP EPS, and the company will therefore provide adjusted GAAP guidance for the 2015 fiscal year, that then takes the transaction into account, after the deal has closed and the purchase accounting has been completed.
According to the tech site Venture Beat, Marc Benioff has shelled out these fairly large bucks for RelateIQ not just to have in house a big data intelligence story, but also to pick up what is a highly regarded management team, including data scientist DJ Patil and Heather Phillips, a top designer.
Big data is all the rage these days, especially if it can attempt to provide predictive capabilities and, it seems, this is key to all the current action in the sales and marketing, and customer relationship management, arenas as well.
It was just four months ago, in March, that RelateIQ raised some new equity money from VC firms, in a financing led by Redpoint Ventures. Its earlier funding to that point had totalled some US$29 million. With the new round, it picked up the same $40 million that today is still sitting un-spent in its balance sheet, and the company was valued in March at a total of $245 million, pre-money. With that round RelateIQ also acquired a number of new investors as well, including Kleiner Perkins Caufield & Byers, Felicis Ventures and News Corp, which is parent of the Wall Street Journal and which also reported the financing.
Scott Raney, one of the partners at Redpoint Ventures, recently pointed out: “The first generation of software-as-a-service companies automated processes but didn’t provide real insights, ” adding, “The next generation of data-driven apps, like RelateIQ, can make data actionable to the average end user.”
Putting that in plain English, one can say that there is lots of data out there but precious little actual information. The Holy Grail in the tech industry now is to turn more of the “noise” into meaningful “signal” in many different areas. Whether it is worth all the hype remains to be seen of course, but it is a great way to try to convince a lot of people – to spend a lot of money, on a lot of new “stuff, ” hardware and software and often both together.